Offering Additional incentives to financial investors

State film credits and grand-father scripts of section 181 of the Internal Revenue Code can offer investors a added incentive to invest.  If you are not familiar with Internal Revenue Code section 181, as a film maker shame on you. Federal job act allows for a production tax incentives. Section 181 allows for a 100 % tax deduction for motion pictures and TV series, oppose to film amortization over a 15 year period.

Section 181

An investor will be able to make an investment with your project for a great ROI without giving up the 100% immediate deduction in the current year committed. Here are some of the guidelines to follow to become eligible for this deduction. http://www.thewrap.com/movies/blog-post/grandfather-your-section-181-benefit-today-32265

“75% of the motion picture must be shot in the US to qualify for Section 181.
- There is a 15 to 20 million dollar budget cap.
- There is no minimum film production budget cost.
- TV pilots, TV episodes (up to 44), short films, music videos and feature films all qualify for Section 181.
- Section 181 can be applied to active income or passive income.
- Investors can be either individuals or businesses.
- Section 181 is retroactive.
- There is no expectation for film distribution or film completion. 
- The motion picture’s corporation issues Schedule K-1’s to the investors so they can take advantage of Section 181”.

For an investor the qualify deduction allows tax rebates and incentives, additional federal and state incentives, may have NOL to carry-back two years or carry-forward for twenty. If investors are set with this years tax incentives, make sure you take advantage of the grandfather rule in section 181 benefits.  Every dollar counts, so think like an investor.

State Tax Credit

Most states like, Louisiana offer tax credits up to 30% of the production budget and additional city or parish credit that may be used to offset tax liabilities. There are standard applications to apply for these credit and they are disbursed first come first served.

http://louisianaentertainment.gov/index.php/film/news/

Louisiana guidelines and clear and straight to the point. Production must be held in the state of Louisiana, a minimum of $300k and above and below the line cost are included. If your not happy with that, after an CPA audit has taken place, the production company may request the state of La. To purchase the film credit for 85% of the certified value. How is that for incentives!